Baku Oil Dynasty Vying With Iran Shaken by Facebook Rallies

As the hotel burned and his forces deployed water cannons, Ilham Aliyev, Azerbaijan's president, was in Switzerland, as seen here, touting in fluent English his economic achievements to global leaders and potential investors at the World Economic Forum in Davos. Photographer: Johannes Eisele/AFP/Getty Images

Feb. 5 (Bloomberg) -- After rioters in Azerbaijan burned
down a hotel owned by a son of one of President Ilham Aliyev’s
ministers, the government blamed the violence on “destructive
forces” -- including presidential challenger Ilgar Mammadov.

Mammadov, selected today as the Republican Alternative
movement’s candidate for the October contest, says the real
culprit is the Aliyev dynasty itself, which has run the former
Soviet oil province of 9.3 million mainly Shiite Muslims for
most of the past 44 years.

“Uprisings may be provoked by minor incidents but they
reflect huge grievances concerning this corrupt and
dysfunctional system,” Mammadov, 42, said in an interview in
Baku on Jan. 30, less than 12 hours after being summoned to
police headquarters for questioning over the Jan. 23-24 riots.
He was detained again yesterday, charged with inciting unrest
and will remain in custody for two months awaiting trial, Erkin
Qadirli, head of the REAL movement’s assembly, said by phone.

Aliyev, 51, has forged alliances with countries such as
Israel and Turkey, steering a pro-Western course while keeping
former imperial masters Iran and Russia at bay after he
succeeded his father a decade ago. He’s stymied all but a
handful of protests since the Arab Spring swept away regimes
across the Middle East, including in Egypt, one of a dozen
countries where he erected a statue of his father, Heydar.

The younger Aliyev won the presidency in 2003 with 77
percent of the vote and in 2008 with 87 percent -- contests
international observers deemed neither free nor fair.

Facebook Dynamics

For this year’s election, though, the “dynamics” have
changed, said Mammadov. In a country where all major media
outlets are state-run or pro-government, social networks such as
Facebook Inc., with almost 1 million Azeri users, are the best
way to gauge public opinion and people are expressing more
frustration toward the government, he said.

“Tensions are rising,” Mammadov said. “There is a real
threat to Aliyev’s rule.”

Elnur Aslanov, head of the political analysis and
information department of the presidential administration
couldn’t be reached on his office phone for comment over two
days and didn’t reply to e-mail.

Police quelled the uprising in Ismayilli, northwest of Baku
near the Russian border, with water cannons and rubber bullets,
prompting 5,000 people to sign up on Facebook for a rally in the
capital the next day. Police thwarted that demonstration by
sealing off the city center and arresting dozens of people amid
chants of “get your guns off us.”

Political Arrests?

As the hotel burned and his forces deployed water cannons,
Aliyev was in Switzerland, touting in fluent English his
economic achievements to global leaders and potential investors
at the World Economic Forum in Davos.

Buoyed by $35 billion in investment from BP Plc-led oil
companies and a U.S.-backed pipeline linking the Caspian and
Mediterranean seas, Aliyev has tripled crude production and the
size of the economy along with it. He’s done so, though, in
increasingly dictatorial and corrupt fashion, stifling media and
jailing and harassing political opponents, according to watchdog
groups including Amnesty International, Reporters Without
Borders and Transparency International.

While Azerbaijan’s credit is considered investment-grade by
all three major rating companies -- Moody’s Investors Service
puts it alongside Iceland, India, Indonesia and Spain at Baa3 --
the country fares worse in terms of corruption and free speech.

Amnesty International last month urged the Council of
Europe to pressure Azerbaijan to “cease arresting and
prosecuting peaceful protesters.” While the Interior Ministry
put the number of detainees from the Ismayilli riot at 62,
Amnesty International said the real figure was in the hundreds
“and there have been allegations of torture in detention.”
Officials in Baku have denied that.

Aliyev’s difficulties extend beyond the borders: He’s under
increasing pressure from his largest neighbors -- Russia to the
north and Iran to the south.

Russia has pushed Azerbaijan to join the Moscow-led Customs
Union of former Soviet states, overtures Aliyev has resisted. He
essentially evicted the remaining Russian troops on Azeri soil
last year by insisting on a 43-fold increase in rent for the
Gabala radar base. Russia rejected Aliyev’s $300 million-a-year
demand for the listening post, which had a surveillance range
that reached into the Indian Ocean, and withdrew its personnel.

Gazprom Snub

Aliyev has also rebuffed proposals from OAO Gazprom, the
Russian gas exporter that has a quarter of Europe’s market, to
buy all the gas Azerbaijan plans to produce at its giant Shah
Deniz field from 2018. He opted instead to commit future
deliveries to the Trans-Anatolia, or Tanap, link to carry the
fuel to Europe via Turkey. State Oil Co. of Azerbaijan, or
Socar, which holds 80 percent of Tanap, plans to start building
the pipeline this year and complete it in 2017.

An even bigger geopolitical threat for Azerbaijan is Iran,
which considers Azeri allies Israel and the U.S. its mortal
enemies, said Brenda Shaffer, a former research director of the
Caspian Studies Program at Harvard University’s Kennedy School
of Government and visiting professor at the Azeri Diplomatic
Academy in Baku.

Eurovision Accusations

Iran, where as much as one-third of the population of 75
million is ethnic Azeri, has repeatedly called for Aliyev’s
ouster via radio and television broadcasts beamed across the
border. Azerbaijan last year jailed dozens of its own citizens
for allegedly being Iranian proxies plotting a wave of terror
attacks on western and Israeli targets in Baku.

Azeri officials said the conspiracy was designed to
interrupt the annual Eurovision song contest, which Baku hosted
for the first time last year. Iran recalled its ambassador in
protest after Baku was named host city, saying via state
television that Europe’s most-watched music competition was an
immoral event that would include a “gay parade.” Recent
concerts in Baku by western stars including Elton John, Jennifer
Lopez, Shakira and Rihanna elicited similar reactions from Iran.

“Tehran has always sought to destabilize independent
Azerbaijan and to prevent its prosperity,” Shaffer said. “Iran
fears that Azerbaijan will be a source of inspiration for its
own ethnic Azeri minority.”

Israeli Drones

Israel, which has called for military strikes to halt
Iran’s nuclear program, is a major arms supplier to Azerbaijan
and one of the largest recipients of Azeri crude. Aliyev said
without elaborating last year that Azerbaijan had bought “high-tech missile-defense systems and drones” from Israel and the
Associated Press reported a year ago that Israel had signed an
agreement to sell $1.6 billion worth of arms to Azerbaijan,
citing unnamed Israeli defense officials.

Iran has accused Aliyev of using the unmanned aircraft to
help Israeli espionage efforts, a charge his government has
denied.

Any military attack on Iran would be a “nightmare” for
Aliyev because it could generate “huge” refugee flows into
Azerbaijan, Matthew Bryza, the U.S. ambassador in Baku in 2011-2012, said by e-mail.

“Such a flow of refugees could be a nightmare for
Azerbaijan and jeopardize what they see as their economic
miracle,” he said.

Another nightmare is unfolding back home that Aliyev must
deal with now, said Camil Hasanli, a professor of history at
Baku State University and a member of the Forum of Intellectuals
opposition group. People are demanding more personal liberties,
fairer courts, less corruption and a larger share of the
nation’s wealth, Hasanli said by phone.

“People are angry, they want justice and cannot find it,”
Hasanli said. “The Ismayilli events will be replicated in other
regions tomorrow because there is no life beyond Baku. You
cannot subdue citizens by the gun.”